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Shares of some UB group firms have rallied as much as 57 per cent since the beginning of the current fiscal, even as the debt-ridden Kingfisher’s stock has mostly languished in the recent months.
In all, five companies of Vijay Mallya-led UB Group have outperformed the BSE 30-stock index, Sensex, where the gain has been less than 6 per cent so far in 2012-13.
Shares of group holding firm UBHL (United Breweries Holdings Ltd) have shot up 57 per cent, while United Spirits Ltd skyrocketed 52.17 per cent, mostly on speculations about possible stake sale in the company.
Shares of McDowell Holdings have also surged 47.2 per cent, while United Breweries scrip rose 16.91 per cent and Mangalore Chemicals & Fertilizers climbed 7.96 per cent.
In contrast, the Sensex has risen 5.82 per cent.
Besides Kingfisher Airlines, UB Engineering is another group stock to have given negative returns this fiscal.
Kingfisher Airlines and UB Engineering saw their share prices decline 10.92 per cent and 10.99 per cent, respectively, during the period under review.
According to market experts, the main driver behind this rally in UB group shares has been speculation about stake sale in United Spirits to save Kingfisher Airlines.
“Speculation has been rife on an imminent stake sale that kept Mallya-controlled companies’ shares on a high spirit at the bourses,” CNI Research CMD, Kishore Ostwal, said.
Kingfisher’s net loss more than doubled to Rs 2,328 crore in 2011-12, from Rs 1,027 crore in the previous year. The airline has a debt of over Rs 7,000 crore.
As per reports, the UB Group is also looking at offloading stake in Whyte & Mackay.
“UB group stocks are rallying mainly due to stake sale reports and hopes of FDI implementation in aviation which is likely to help debt-ridden Kingfisher,” Alex Matthews, Research Head, Geojit BNP Paribas, said.
According to Gajendra Nagpal, Unicon Financial Solutions, CEO, the rally is not likely to sustain in the long-run given there is not much steam left which can further fuel rally in these stocks.
Late last week, the Government allowed 49 per cent investment by foreign airlines in aviation — a long-awaited move by Kingfisher to help it raise capital by bringing in a strategic partner.
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